Reed Outlines How RI Restaurants & Bars May Tap Into Some Overdue Economic Relief from the American Rescue Plan
PROVIDENCE, RI – Rhode Island is poised to get a big dose of overdue financial relief from the newly enacted American Rescue Plan.
The new $1.9 trillion law will get vaccine doses into arms and help put money into pockets: delivering $1,400 direct payment checks to working Americans and extending unemployment insurance for jobseekers. It also delivers critical federal funds to empower schools to safely reopen and will help state and local governments save jobs and tailor solutions to communities hit hardest by the pandemic.
And, for the very first time since this pandemic struck, a federal COVID-19 stimulus package will direct federal grants to be used specifically for restaurants, bars, and the food service industry. A new $28.6 billion Restaurant Revitalization Fund (RRF) was included in the law to help restaurants nationwide that experienced pandemic-related revenue losses in 2020. This federal aid is designed to help independent, local eateries and drinking establishments make payroll, meet food and beverage costs, cover operational expenses, and survive the economic damage caused by the pandemic.
Senator Reed recently joined with the head of the Rhode Island Hospitality Association and local restaurant owners at Chez Pascal in Providence to discuss what this new law means for Rhode Island.
“Restaurants add so much flavor and character to our neighborhoods. They bring people together and help generate jobs and opportunities. But when the pandemic hit, suddenly, restaurants just couldn’t serve people the way they used to. In fact, the government asked them not to. So through no fault of their own, restaurant revenue was way down, but bills still piled up and the restaurant community had to lay people off. But restaurant owners never stopped working, adapting, and trying to overcome obstacles by erecting outdoor seating, buying heat lamps, focusing on take out, and doing whatever they could. Now, finally, Congress is providing a $28.6 billion pot of federal grants to help restaurants and bars, and I want to ensure Rhode Island establishments can access their fair share,” said Senator Reed, a cosponsor of the bipartisan RESTAURANTS Act of 2021 (S. 255), which would help independent restaurants, bars, caterers, and small restaurant groups. Senator Reed helped successfully advocate for this Restaurant Revitalization Fund in the final version of the American Rescue Plan.
Senator Reed says that under this new law, restaurant owners will be able to apply for grants through a soon-to-be established web form administered by the U.S. Small Business Administration (SBA). Federal funds will be awarded as grants, meaning local businesses will not need to repay them like a loan. However, if a business does not use all the federal funds for allotted purposes or the establishment permanently closes before the last day of the covered period, it must return the remaining balance to the U.S. Treasury.
“Rhode Island’s hospitality industry is so pleased with the passage of The American Rescue plan. Congress has delivered on the hospitality-specific relief that our industry needs and deserves after closures, increased costs and decreased revenue have threatened the ability of so many to stay in business this past year,” said Dale J. Venturini, President/CEO, RI Hospitality Association. “Thank you Senator Reed for your continued leadership to assist small businesses and particularly those in the hospitality industry. The signing of this bill sets the stage for the Small Business Administration to begin to administer the funds in the Restaurant Revitalization Fund to some of the smallest and hardest-hit businesses enduring this pandemic.”
“Our restaurant industry makes up the backbone of Rhode Island’s small business community. Thousands of hard working restaurant owners and employees have spent the last year struggling to adjust to restrictions that caused severe economic and personal hardship. With the passage of the American Rescue Plan by Congress our restaurants will now have the opportunity to receive the financial resources needed to recover and stay open for us all to enjoy. Senator Reed has been a strong voice for us throughout the last year and we are extremely grateful for his leadership on the Restaurant Revitalization Fund. We look forward to working with the Small Business Administration to quickly spread the word on how to qualify and apply for RRF grant,” said Rick Simone, Founder of the Ocean State Coalition and Executive Director of the Federal Hill Commerce Association.
Food service sales were about $240 billion below expected levels in 2020, according to the National Restaurant Association.
“The restaurant industry is the second-largest, private-sector employer in the United States and we are grateful for the passage of The American Rescue plan. By allocating $28.6 billion specifically for our industry, Congress has acknowledged the devastating impact of COVID-19 on our businesses. Thank you, Senator Jack Reed for your support of this very important legislation which will have long-term, positive effects on the hospitality industry,” said Brian Casey, the Chairman of the Board of the National Restaurant Association and the owner of The Oak Hill Tavern in North Kingstown.
Senator Reed helped outline several key details about how the Restaurant Revitalization Fund could impact Rhode Island:
The SBA will have two main pots of funding:
- $23.6 billion is available for the SBA to award in an equitable manner to businesses of different sizes based on annual gross receipts.
- $5 billion initially set aside for smaller restaurants and bars with gross receipts of $500,000 or less during 2019.
The SBA will award grants based on an establishment’s pandemic-related revenue losses, which is the difference between their gross receipts in 2020 and their gross receipts in 2019. The amount of any Paycheck Protection Plan (PPP) loans received by an entity will be subtracted from its RRF grant amount. Grants are capped at $5 million per restaurant and $10 million per restaurant group, and can be used to cover expenses incurred between February 15, 2020 and December 31, 2021, or a later date as set by SBA.
Eligible businesses must have lost revenue in 2020, compared to 2019. Establishments that opened in 2020 and saw pandemic-related revenue losses will also have access to these funds.
The primary function of an eligible small business must include serving and selling food or beverages. This includes restaurants, bars, caterers, food trucks, and tasting rooms.
Publicly-traded companies and firms that own, operate, or are affiliated with more than 20 locations are ineligible. A business cannot obtain an RRF grant if they have received, or have a pending application for a Shuttered Venue Operators Grant.
WHEN & WHERE CAN LOCAL BUSINESSES APPLY?
The SBA is currently in the process of establishing a web site or mechanism for businesses seeking grants. It is widely expected to offer guidance and an application process in the coming weeks.
Congress mandated that for the first 21 days of grant applications, the SBA will prioritize certified establishments owned by women, veterans, or economically and socially disadvantaged individuals. The SBA Administrator can take further action to ensure these entities have access to grant funding after the priority window expires.
SBA will begin awarding funds on a first-come-first-served basis after this initial 21 day prioritization window.
Application deadlines have yet to be announced.
ARE THE FUNDS TAXABLE?
All grant awards must be spent or returned to the U.S. Treasury by December 31, 2021. For tax purposes, these federal funds will be excluded from 2021 gross income, and businesses will be able to make allowable deductions for expenses paid with grant funds.
Senator Reed is urging Rhode Island restaurants and bars to get their financial materials in order now so they can apply when it’s time. And he announced he will hold a virtual roundtable for interested restaurants and bars after the SBA offers its initial guidance.
“Once we get everyone vaccinated, Rhode Island’s restaurants will help lead us toward economic recovery. And in addition to the Restaurant Revitalization Fund, the $1.7 billion state and local aid package for Rhode Island, along with the $1,400 direct payments we passed as part of the American Rescue Plan, should also help pump billions into the economy. We’ve still got a tough road ahead. But much needed federal assistance is on the way and should offer a big boost to Rhode Island families, restaurants, and other Main Street businesses,” concluded Reed.